It can be scary to invest in anything during a recession. We all carry visions of the great depression and bread lines and people selling apples. The idea of putting your money into anything other than your mattress can be frightening for some. However, real estate should never be looked upon as an ordinary investment.
Real estate is one of the few investments that we actually use and need. Everyone needs a place to live and call home. And real estate has systematically and quantifiably proven to have risen in value over the decades.
Mortgage rates have not been as low as they are today since the 1960s. This is an ideal time to invest in real estate and take advantage of those low interest rates as well as the attractively low prices on property in many areas around the country. Because there are so many more properties on the market than there are buyers, in other words supply outstrips demand, the price for property in most areas has fallen considerably. On top of that, there are people who have overextended themselves in the early part of the century and are now finding themselves facing foreclosure.
Now Is The Time To Buy And Buy Cheap.
Do not feel intimidated by a real estate agent who tells you that you are going to “insult” someone if you offer a low price for their property. The real estate agent wants you to spend as much as possible because their fiduciary responsibility is with the seller, and they get a commission based on the sales price. Use your head and take a look at the market. When you invest in real estate during a recession, consider the following:
Why Are They Selling?
If you’re purchasing from a builder/developer than why they are selling becomes less important. But if purchasing directly from the owner in a private sale, you can find out by simply asking the seller or your agent. If the property is in a state of disrepair, chances are that there are financial problems. Don’t be afraid to offer a significant amount less. If the owner is buying another home and needs to close on the first one soon, again don’t be afraid to offer less than their asking price.
How Long Has The Property Been On The Market?
A few years ago, a home that was on the market for several months was either priced too high or there was something significantly wrong with the property. Today, properties stay on the market for 90 days or more in many parts of the country due to the prevailing market conditions. Avoid making a lowball offer on a property that is fresh on the market unless you know it is going into foreclosure or just about to become foreclosed upon. However, feel free to make low offers on properties that have been on the market for a month or more. Those that have been on the market for over a year are owned by people who are willing to ride out the storm and will most likely not be sold for a low price.
Is The Property In Foreclosure?
If the property is bank owned, you should be prepared to offer a lot less than the asking price. Don’t allow a real estate agent to sway you when it comes to making an offer. If they say, “I do not want to present such a low offer,” tell them that you are prepared to find someone else who will. There are many real estate agents looking for a sale, especially in the today’s market. If the property is in foreclosure, offer at least 20 percent below the lender’s asking price.
Contrary to what you may have heard, this is the best time to buy a property. Always do your homework and don’t be afraid to invest in real estate during a recession.